Interdealer broker NEX reports rise in profit, sees subdued market

Reuters Staff

2 Min Read

(Reuters) - UK-based financial broker NEX Group reported higher profit for the year to March, but said that trading activity since the start of the year had remained subdued due to low volatility sending its shares down 1.5 percent.

The company, which matches buyers and sellers of bonds, swaps and currencies, said its trading operating profit from continuing operations rose 4 percent to 145 million pounds in the year ended March 31.

Revenue from continuing operations increased by 18 percent to 543 million pounds, said NEX, which was known as ICAP before it sold its voice broking business to TP ICAP last year.

Interdealer brokers benefited last year from increased market volatility after unexpected outcomes in global politics, such as Donald Trump's victory in the U.S. presidential election and Britain's decision to leave the European Union.

However, the wider sector has long struggled with declining volumes, hit by regulation designed to rein in the riskier trading activities of traditional investment bank clients.

"Our performance remains strong in a tough market environment," Chief Executive Michael Spencer said in a statement on Monday.

NEX cited benefits from an increase in trading in NEX Optimisation, its post-trade and information services operation, and NEX Markets, its electronic trading platform for fixed income markets and electronic FX trading business.

Financial market volatility has fallen to historic lows in recent months, despite global and political uncertainty, which NEX said was translating into relatively light trading volumes.

The company said it would continue to invest in new products and continue with its efficiency programme, with the aim of increasing divisional operating margins to at least 40 percent.

NEX shares were down 1.5 percent at 590 pence at 0709 GMT. The stock was the second largest percentage loser on London's FTSE midcap index.